According to newly released DWP data published earlier this week, the number of families subject to the benefit cap has increased by 13% since November, reaching 200,000 by February 2021.
The newly capped households were most likely capped as a result of job losses or reduced working hours due to Covid-19, and as a result, their incomes fell below the earnings exemption threshold.
However, with the pandemic’s impact still being felt, few will be able to replace their wages and become ‘uncapped’. Average weekly losses for capped households are £62.
The limitation restricts the total amount of assistance that low-income or unemployed applicants may receive. Universal credit applicants earning less than £617 per month are excluded.
Claimants who earned more than £617 per month in the preceding year are granted a nine-month grace period during which they are exempt from the cap.
Among the newly capped are Covid-19 job victims who initially qualified for a grace period but whose grace period has already expired, placing them inside the cap’s reach at a time when new employment and additional working hours remain scarce.
According to the Child Poverty Action Group (CPAG), the number of capped households will continue to grow as successive cohorts of Covid job casualties reach the end of their grace periods.
Since the pandemic began, the number of capped households has more than doubled, with the bulk of the rise occurring in London, and the majority of capped homes are families with children.
Because the benefit cap has been unchanged since 2016, the gap between the social security help received by capped families and what they require has risen proportionally.
The ceiling is set at £23,000 per year for couples/lone parents living in Greater London (irrespective of the number of children) and £20,000 for couples/lone parents living outside the city.
The cap has had little effect on employment; fewer than 5% of individuals have gone into labour as a result of it.
This is unsurprising, given that the great majority of capped households earn below the threshold not out of choice, but due to significant impediments to employment – most notably difficulty obtaining and paying for childcare – and are not compelled to work.
Alison Garnham, Chief Executive of CPAG, said: “The benefit cap has always been an unjust punishment for families.
“Most families affected by it can’t work to escape it – often because they are looking after young children or can’t find affordable childcare they can combine with work and single parenting.
“Thousands more households who have lost jobs to Covid-19 are now subject to the cap even though in the pandemic it is much harder to find ways to replace their lost earnings and become exempt.
“Especially in areas with high rents, capped families are losing large amounts of social security support and that is disastrous for the children concerned.
“The Government must abolish the benefit cap to prevent more children from being damaged by impoverishment.”